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Innovative incentive mechanisms for environmental policy instruments

The instrumental design of traditional environmental and resource economics is based on the assumption of an unambiguous incentive and response logic among the affected actors. This means firstly that it is possible to noticeably change the incentive logic with environmental instruments, and thus to also bring about the predicted behavioral changes on the part of the affected actors. Secondly, it means that on this basis the impact of various instruments can be clearly classified and subjected to comparative analysis.

At the center of such an analysis of environmental instruments is the concept of a fully informed actor who is able to act immediately and committed to the pursuit of self-interest (homo economicus). Due to the transparent behavioral logic of this stylised actor, the effects of various alternative instruments can be directly deduced from the resulting changes to the restrictions placed on the actor.

In this project, adelphi examined whether and how concepts from behavioral economics can be applied to the assessment of environmental policy instruments in order to replace the currently schematic assessment of these instruments from the homo economicus perspective. At the same time, new approaches and findings in behavioural economics were assessed and considered with respect to possible extensions of the set of environmental instruments.